Edited version of private advice

Authorisation Number: 1051506968320

Date of advice: 14 May 2019

Ruling

Subject: FBT implications of the provision of emergency assistance

Question 1

Are the benefits provided to the Taxpayer's employees and their dependants, exempt benefits pursuant to section 58N of the Fringe Benefits Tax Assessment Act 1997 (FBTAA)?

Answer

Yes

Question 2

Are the benefits provided to the Taxpayer's employees and their dependants exempt fringe benefits pursuant to section 58N of the FBTAA for a timeframe that is reasonable in the circumstances?

Answer

Yes

This ruling applies for the following periods:

Year ended 31 March 20xx

The scheme commenced on

1 April 20xx

Relevant facts and circumstances

On xx January 20xx, a natural disaster occurred.

In response to the State of Emergency, the Taxpayer provided their employees and their dependents with emergency assistance. The package of benefits included a number of emergency assistance benefits. The Taxpayer provided the benefits on a needs basis up to a maximum period.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 58N

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Income Tax Assessment Act 1936 section 318

Reasons for decision

Question 1

Summary

The benefits provided to the Taxpayer's employees and their dependants, and emergency benefits provided to the Taxpayer's employees and their dependants are exempt benefits pursuant to section 58N of the FBTAA.

Detailed reasoning

Application of section 58N

Section 58N of the FBTAA provides an exemption for emergency assistance provided to an employee or to an associate of an employee.

In order for the benefit to be exempt under section 58N of the FBTAA, the following two conditions must be satisfied:

(a)   a benefit is provided in respect of the employment of an employee of an employer, and

(b)   the benefit is provided solely by way of the grant of emergency assistance to the recipient.

For the purposes of section 58N of the FBTAA, an 'emergency' is defined in subsection 136(1) of the FBTAA to mean an emergency involving any of the following matters:

(a) a natural disaster;

(b) a conflict involving an armed force;

(c) a civil disturbance (d) an accident;

(e) a serious illness;

(f) any similar matter.

The definition of 'emergency assistance' in subsection 136(1) of the FBTAA in relation to a person, means assistance granted to the person where:

(a)   the person is, or is at immediate risk of becoming, the victim of an emergency;

(b)   the assistance is granted to the person solely in order to provide immediate relief;

(c) the assistance is in respect of all or any of the following matters:

(i) first aid or other emergency health care;

(ii) emergency meals or food supplies;

(iii) emergency clothing;

(iv) emergency transport;

(v) emergency accommodation;

(vi) emergency use of household goods;

(vii) temporary repairs;

(viii) any similar matter.

Emergency benefits provided the Taxpayer's employees are provided in respect of their employment as required by paragraph 58N(a) of the FBTAA. Benefits provided to employees' dependants are also provided in respect of the employees' employment, and therefore satisfy the requirement of paragraph 58N(a) of the FBTAA.

A dependant, being a spouse or child of an employee, would meet the definition of 'associate' in section 318 of the Income Tax Assessment Act 1936 and therefore would be considered an associate for the purposes of the FBTAA.

The event was a natural disaster. A natural disaster is listed in the definition of emergency in section 136(1) of the FBTAA.

All benefits provided to the Taxpayer's employees and their dependents satisfy the definition of 'emergency assistance' in subsection 136(1) of the FBTAA. If not specifically listed under items (c)(i) to (vii), the Commissioner accepts the remaining benefits are 'any similar matter' covered under item (c)(viii) of the definition of 'emergency assistance' in section 136(1) of the FBTAA.

Therefore, emergency benefits provided to the Taxpayer's employees and their dependents are exempt benefits under section 58N of the FBTAA.

Question 2

Summary

The benefits provided to the Taxpayer's employees and their dependents are exempt benefits pursuant to section 58N of the FBTAA for a timeframe that is reasonable in the circumstances.

Detailed reasoning

Absent any specific time limit set out in section 58N of the FBTAA, the exemption may apply to emergency assistance provided to employees and their associates for a timeframe that is reasonable in the circumstances. In the situation of the natural disaster, the provision of emergency assistance up to a maximum period of x is appropriate in the circumstances given the magnitude of damage and the extraordinary nature of the disaster.

Not all of the benefits will be provided for a x period. Mechanisms have been established to wind back the emergency benefits as the situation improves. The specific benefits will only be provided for the necessary period of time to deliver immediate relief for the Taxpayer's employees and their dependants following the natural disaster in accordance with the conditions of section 58N of the FBTAA.

Emergency benefits were provided to the Taxpayer's employees and their dependants for a period not exceeding x. For the purposes of section 58N of the FBTAA, this timeframe is considered to be reasonable in the circumstances.